Online video has the capacity to transform advertising on the internet. Online accounts for 27 per cent of all media consumption in the UK, but only 12 per cent of total advertising spend.
This gap suggests that the advertising industry has been slow to respond to the digital medium. But brand advertisers have been right to be cautious about advertising online because key elements, such as content, reach, format and measurability, are only now becoming really fit for purpose. The change is online video.
It is transforming online usage, content and advertising. But, to recognise the opportunity online video offers brand advertisers, it's necessary to understand this transformation.
It started with usage. A YouGov online survey commissioned by Utarget earlier this year found that users now spend 50 per cent of their time online browsing for interest and entertainment and only 21 per cent on "task-oriented" activities, such as obtaining information or services.
Only a year or two ago, online users were bound by their desktops and dial-up, primarily in task mode. Now, liberated by broadband and Wi-Fi, they are more likely to be just browsing and, as a consequence, spending far more time online. The same YouGov survey found that the average user now spends 3.5 hours a day on the internet. This change in the nature and extent of online use is due in part to the participation in community sites such as MySpace, but primarily it is due to the availability of video.
To date, most online video has been user-generated, such as on sites such as YouTube. Such uncontrolled and unlimited content is unpromising territory for brand advertising. But the phenomenon of YouTube has been a call to action for broadcasters and content creators. All major broadcasters are now putting their content online to reach this growing audience. The successful relaunch of ITV.com is a good example. In addition, new companies are creating video specifically for the online medium. Videojug.com is a pioneer in what clearly will be a huge market for instructional video. Also, high.tv, dedicated to video about extreme sports, will reach out to a global audience for niche interests. Such sites are a new breed: the broadband TV channel with video at centre stage. A wide variety of professionally created video content, driven by user demand, is now being rapidly developed and distributed online.
Usage is driving content and together they are generating new and exciting opportunities for brand advertising. Online video ad formats, such as pre-rolls (which appear before video content) and subsites (which appear full screen after a user leaves a site), deliver video ads direct to users, so offering the volume reach of TV. These formats can be supplemented by adjoining banners as direct-response mechanisms. Our experience is that the "laid-back" browser will engage with relevant, proportionate and engaging ads in return for free access to quality online video content. Relevancy for users goes hand-in-hand with targeting for advertisers.
Recently, we delivered six different ten-second ads for Redrow Homes (adapted from its TV ads) across only our property and home-decor sites within our subsite network. According to Redrow, the campaign generated a 35 per cent response rate.
"Long-tail" ad networks (composed of hundreds of specialist websites) will become increasingly important in delivering advertisers to niche consumer audiences, especially those increasingly hard to reach through traditional media, such as the youth market.
It is critical that ads are of reasonable and proportionate length. Our YouGov survey found that 93 per cent of users were amenable to pre-roll ads if no longer than 15 seconds (before "short-form" video of three to four minutes). As critical as length is, of course, engagement with users is just as important.
Creativity in online ads will need to become more impactful for the new video audience, instead of just finding ingenious ways to cajole the old audience to click to receive ads. The recent Kate Moss ads for Agent Provocateur, which exploit interactivity within the video, are showing the way.
Also important is measurability. We know online can provide precise metrics for audience size and response, and the new-media industry is developing effective ways to measure brand engagement performance. The IPA, ISBA and the Internet Advertising Bureau have formed the Joint Industry Committee for Internet Measurement Systems to create a standard planning online currency to make cross-media planning intuitive and simple.
Some advertisers will become publishers and imitate, or infiltrate, the world of Web 2.0. But this online approach is risky for brands and often presumes an unrealistically high level of interest and engagement from time-poor users. Certain walled-garden services using broadband as a delivery platform, such as BTVision, will form a sector within the new market. But these will be peripheral to the main market of direct brand advertising via online video (wrapped around quality video content) on the open internet.
The key elements for online brand advertising - content, reach, format, engagement, targeting and measurement - are now sufficiently developed for major brands. Procter & Gamble and Unilever are now committing major ad budgets to digital. They recognise that online video advertising now offers the impact and reach of the TV medium with the targeting, interactivity and measurement of online.
Online video is creating a new revolution in media. YouTube was the wake-up call and content creators are responding by generating video content and distributing it on the open web for the huge new browsing audience.
Online video ad formats, such as pre-roll and subsite, have been developed to monetise this content and fulfil the needs of brand advertisers. This is now a rapidly accelerating virtuous circle of mass usage driving new content and both are creating a fast-expanding market for brand advertisers. Time to climb on board.
- David Michael is the strategy director at Utarget Networks.